Shareholders Agreements: majority/minority shareholders
Shareholders Agreement between majority and minority shareholders
Background: Shareholders Agreements
Shareholders in a company where one shareholder holds a majority of the shares (more than 50%) and the other shareholder holds a minority of the shares (less than 50%) should consider having a shareholders agreement to regulate the management of the company and their relationship as shareholders.
Their agreement should reflect the usual matters covered by a shareholders agreement but in a manner which reflects the relative ownership and control of the company.
As the holder of a majority of the shares, the majority shareholder will expect to be able to determine the day to day control and management of the company. This control and management will be documented by clauses in the shareholders agreement which entitle the majority shareholder:
- to appoint a majority in number of the board of directors of the company
- to pass board decisions (by virtue of its appointed directors) to enable the day to date management and running of the company
- to pass shareholder resolutions which require a simple majority vote
- to be able to sell the company and to require the minority shareholder to sell its shares on the same terms (drag-along rights)
Depending on the percentage share of the issued shares that the minority shareholder holds, the minority shareholder will want the shareholders agreement to include clauses which entitle the minority shareholder:
- to appoint a director
- to approve specified material matters (reserved matters)
- to be offered the opportunity to sell its shares on the same terms should the majority shareholder sell its shares to a third party (tag-along rights)
The exact scope of the control rights of the majority shareholder and the rights of the minority shareholder will be a matter for negotiation between them.
About this Shareholders Agreements
This is a shareholders agreements between majority and minority shareholders in a private limited company.
Document features
- Full form shareholders agreement between majority and minority shareholders
- Clauses relating to the following matters:
- Business of the company
- Shareholder roles and services
- Shareholdings
- Funding
- Director appointment rights and board decision-making
- Shareholder decision-making
- Rights to dividends
- Matters requiring prior approval of specified shareholders (“reserved matters”)
- Future share issues
- Transfers of shares
- Shareholder information rights
- Shareholder restrictive covenants
- Duration and termination
Explanatory guidance
Explanatory guidanceAs with all of our document templates, your purchase will include access to clear explanatory guidance on the document and its use.
All Paper Rock legal templates are written by highly qualified English lawyers that are currently practising in the field of commercial and corporate law. The templates you download here reflect the same quality as if you’d instructed our lawyers to draft them for you. They also write all our document descriptions so you can rest assured every bit of information is legally accurate up to date.
Whatever your method of purchase, there is no limit to the number of times you can download your templates. However, many customers prefer to invest in an annual subscription. This offers exceptional value with unlimited downloads from our entire document library.
The Paper Rock team is available to answer questions via Live Chat during UK business hours. When live chat is unavailable, email support@paperrock.com. We aim to respond to your emails within a 24-hour period. We also encourage you to ask questions via our social channels.